May 3, 2017
In Advance of 2010’s ‘Flash Crash’ Anniversary, Lawmaker Takes Aim at High-Speed Trading With Sensible Solution
Statement of Susan Harley, Deputy Director of Public Citizen’s Congress Watch division
Note: Today U.S. Rep. Peter DeFazio (D-Ore.) introduced legislation to curb speculative Wall Street trading and bolster Main Street by introducing the Putting Main Street FIRST (Finishing Irresponsible Speculative Trading) Act of 2017. If passed, the legislation would impose a .03 percent (three cents out of every $100 traded) tax on Wall Street trades, stabilizing the market by reducing the use of high-frequency trading algorithms that encourage dangerous speculation and can worsen financial market volatility. DeFazio’s legislation comes in advance of the anniversary of 2010’s “flash crash,” a trillion-dollar stock market crash that rattled markets around the world for more than 30 minutes.
It can happen in a flash – markets bottom out because high-frequency computer algorithms flock toward trading trends instead of riding out regular market ups and downs. Taxing Wall Street trades would help solve this market irrationality by adding a small speed bump and make millisecond trades unprofitable while average investors would not even notice the tiny tax. And those three small cents out of every hundred dollars traded stack up to more than $417 billion in revenue over 10 years, according to an official congressional analysis.
Public Citizen applauds the reintroduction of this critical reform.